Your Emergency Fund and YouSubmitted by MCF Advisors on June 29th, 2017
Summer is finally here. The sun is out, it’s warm, the days are longer, and your worries seem just a little bit further away. But, folks, sometimes storms roll in on the sunniest of days. And if we’re honest, the world is a bit of a scary place at the moment, with politics impacting the economic climate, and warmer temperatures affecting agriculture all around the world, the future is perhaps not as certain as it once was.
So instead of purchasing a bunker and preaching the end is near to your entire social media following, prepare for the uncertainty with an emergency fund. What is an emergency fund? According to Investopedia, an emergency fund can be defined as, “an account used to set aside funds needed in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to draw from high interest debt options, such as credit cards or unsecured loans.”
The old saying ‘failing to prepare is preparing to fail’ comes to mind when thinking about the importance of an emergency fund. It’s not necessarily top of mind when payday arrives, however contributing to your emergency fund should feel as urgent as paying off monthly bills.
So how much should you contribute to your emergency fund?
As daunting as it might seem, we generally recommend that you save 3-6 months of living expenses in your emergency fund, depending upon your personal circumstances. If you’re at the beginning of your journey to creating an emergency fund, where should you start? Try to set monthly goals and stick to them. Look to cut back on things that could be considered luxuries, and focus on how you’ll feel when that next emergency happens and you’re covered because you prepared.
Now, it’s critical to remember what an emergency really is. It is not a vacation, a new wardrobe, or even a new boat. It truly needs to be allocated to emergencies. If you’d like assistance in determining the appropriate amount of funds to allocate to your emergency fund, contact an advisor at MCF.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by MCF), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from MCF. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MCF is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the MCF’s current written disclosure statement discussing our advisory services and fees is available upon request. If you are a MCF client, please remember to contact MCF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Please click here to review our full disclosure.